Letter from the Chairman
Dear Stakeholders,
2023 was a year characterized by a global polycrisis that left its mark on the chemical industry, as it prompted volatile raw material costs, supply chain issues, inflationary pressures, soaring interest rates, destocking across many industries, and shrinking consumer demand. All of these economic developments took place while the world was shaken by two terrible wars. Russia’s ongoing attack on Ukraine keeps turning the international order upside down. And with the war in the Middle East, another major conflict is claiming innocent lives.
In such times, it is difficult for any company to make long-term strategic decisions. This is why it is more important than ever that we at Clariant reflect on our journey, adapt to the changing reality, and navigate the path ahead with confidence in our own strength. We are aware that the development of our share price cannot be satisfactory for our shareholders. The Board of Directors shares this view. Together with the Executive Steering Committee, we are therefore developing a concept and concrete plans that should lead to improved performance and thus also to a higher valuation.
2023 was the first full year in which the Executive Steering Committee (ESC), established in summer 2022, steered the company, and it was the first year in which Clariant’s operations were organized in the three Business Units Care Chemicals, Catalysts, and Adsorbents & Additives. My colleagues on the Board of Directors and I are glad to see that the ESC has worked together so well in its first full year, and that it has made important decisions to steer the company in the right direction.
Based on the financial performance in 2023, the Board of Directors is proposing a distribution of CHF 0.42 per share, thus remaining at the same level as last year.
When we look back at Clariant’s performance in 2023, I would also like to point out that all three business units took important steps for further growth: The proposed acquisition of Lucas Meyer Cosmetics will complement the existing customer and product portfolio, the geographic footprint, as well as the marketing and innovation capabilities of Care Chemicals, making this a strong strategic fit for Clariant. After the closing of the transaction, which we anticipate for the first quarter of 2024, we will be able to expand our reach into the high-value cosmetic ingredients space. Catalysts and Adsorbents & Additives both increased their capacities in China. Clariant is now in an even better position to participate in growth markets, like e-mobility, and to produce »in China, for China,« thus reducing supply chain risks.
These initiatives show: We are willing to make significant investments to support our sustainable growth strategy. We monitor the returns of each investment closely, and we make decisions if these expected returns fail to materialize. In the case of the sunliquid® bioethanol production in Podari, Romania, the Board of Directors concluded that, given continued losses, the economics of the plant in Podari cannot justify for Clariant to continue ramp up, which would have required significant additional capital expenditure. As a result, we decided to close the plant and downsize related activities of the Business Line Biofuels & Derivatives at our German locations Straubing, Planegg, and Munich. We will, however, keep the required capabilities to maintain the technology and fulfill existing contractual obligations. We also work closely with employee representatives in Romania and Germany and are committed to finding solutions that are most socially responsible.
» Our solutions make a real difference when it comes to decarbonizing the economy and reaching the climate targets that the world has agreed upon. «
Günter von Au
Chairman of the Board of Directors
While 2023 was a difficult year for the chemical industry as a whole, it brought home an important fact: Specialty chemical companies like Clariant have a more resilient business model compared to commodity providers. We offer innovative products that are very hard for other companies to reproduce, and that customers value because of their performance and sustainability properties.
In 2023, the world continued on its energy transition path and made further steps away from the use of fossil resources. Entire societies are changing their ways to become more sustainable, and many industries are rethinking their operations and their ecological footprint. This is the perfect environment for companies with innovative technologies and sustainable products – such as Clariant. Our solutions make a real difference when it comes to decarbonizing the economy and reaching the climate targets that the world has agreed upon. We see that the regulatory framework with respect to sustainability is tightening, especially in the EU. Thanks to our pioneering role as a sustainable manufacturer of specialty chemicals, we are well prepared for this development and can expect to benefit from it.
Speaking of sustainability, Clariant remains committed to achieving its medium-term financial and 2030 non-financial targets and to advancing in environmental, social, and governance dimensions. This includes the implementation of science-based targets to fight climate change and contributing to the UN Sustainable Development Goals (SDGs).
Looking ahead, the geopolitical and economic uncertainties are likely to stay with us for quite some time. We are closely monitoring how the global markets develop and how regulatory frameworks, trade agreements, and investment incentives might influence Clariant’s business perspectives. We will adopt an agile response to the economic environment and remain resolute in our plans to achieve the medium-term targets. China will continue to be important for us. While the market environment in the country remains challenging, its growth fundamentals remain intact. Increasing our local presence in China will not come at the expense of other markets. For example, the planned acquisition of Lucas Meyer Cosmetics underlines our strong interest in the Americas. We also keep a close eye on the competition between the EU and the US, as it has a significant impact on our operations and strategic decisions.
As the world keeps changing quickly, Clariant is privileged to rely on its highly committed and skilled people. My colleagues on the Board of Directors and I would like to thank all employees for their constant support, for their integrity, and for making the first operational year of our three new business units a success. We would also like to take this opportunity to thank our customers, investors, shareholders, suppliers, and other stakeholders. All of you play an important role for Clariant, and together, we are able to create »Greater chemistry – between people and planet.«
Sincerely,
Günter von Au
Chairman of the Board of Directors
